The present invention is related to financial transactions conducted with portable consumer devices such as payment cards and smart cards.
Portable consumer devices can take many forms and are used in a great variety of financial transactions. The devices can comprise, for example, smart cards, payment tokens, credit cards, debit cards, contactless cards, and the like. The financial transactions can involve retail purchases, transit fare collection, access to venues, and the like. In all such transactions, the device users (consumers) are primarily concerned with convenience, ease of transacting business, and quickness of the transaction. Businesses and account acquirers and card issuers are concerned with preventing fraud, which ultimately increases costs to consumers.
Fraud prevention typically involves authentication that a card user is entitled to use the card and verification that the user account has sufficient funds for the desired transaction. Conventional payment card systems utilize an authorization process and user authentication requirements that involve online data communications over processing networks to check data with systems of the businesses, acquirers, and issuers. Such systems generally require that the user must pass the card through a card reader or other mechanism to permit the system to read data from the card and, in some cases, write data back to the card. Although such processing can be effective at preventing fraud, such procedures can increase the transaction time to certify a card for use and can make it difficult to provide an efficient and convenient user experience.
The problems encountered in such payment card systems has led to an interest in the use of contactless “smart” cards or contactless smart chips as part of a payment system. A smart card is generally defined as a pocket-sized card (or other portable payment device) that is embedded with either a microprocessor and one or more memory chips, or as one or more memory chips with non-programmable logic. The microprocessor type card typically can implement certain data processing functions, such as to add, delete, or otherwise manipulate information stored in a memory location on the card. In contrast, the memory chip type card (for example, a pre-paid phone card) can only act as a file to hold data that is manipulated by the reading device to perform a pre-defined operation, such as debiting a charge from a pre-established balance held in the memory or secure memory. Smart cards, unlike magnetic stripe cards (such as conventional credit cards), can implement a variety of functions and contain a variety of types of information on the card. Therefore, in some applications they do not require access to remote databases for the purpose of user authentication or record keeping at the time of a transaction. A smart chip is a semiconductor device that is capable of performing most, if not all, of the functions of a smart card, but may be embedded in another device.
Smart cards come in two general varieties; the contact type and the contactless type. A contact type smart card is one that includes contacts which enable access to the data and functional capabilities of the card, typically via some form of terminal or card reader. A contactless smart card is a smart card that incorporates a means of communicating with the card reader or terminal without the need for direct contact. Thus, such cards may effectively be “swiped” by passing them close to the card reader or terminal Such contactless cards typically communicate with the card reader or terminal using RF (radio-frequency) technology, wherein proximity to an antenna causes data transfer between the card and the reader or terminal Contactless cards have found uses in banking and other applications, as they may not require removal from one's wallet or pocket in order to complete a transaction. Further, because of the growing interest in such cards, standards have been developed that govern the operation and interfaces for contactless smart cards, such as the ISO 14443 standard. A variety of financial transactions, such as retail payment and transit fare collection, have adopted the ISO 14443 standard for contactless smart cards.
Some applications, however, are limited in their ability to accommodate conventional online authentication and verification schemes. For example, for transit fare collection and venue access, long lines of persons who wish to gain entrance mean that the speed of the transaction for the user is a primary consideration. This means that the transit fare payment and collection process cannot be performed effectively using a conventional online authentication and approval process. This presents a difficulty because effective fraud prevention typically requires authentication that the card user is entitled to access and has sufficient funds for the desired transaction. In addition, different fare collection systems will typically have different authentication requirements, fare calculations, and ancillary data requirements. This means that a smart card, if desired to be used in a fare collection environment, must contain the data relevant for the system a user wishes to utilize. This can become a significant problem if a user wishes to utilize more than one system, such as multiple transit agencies or venues within a single geographical area or in different cities or locations.
Further, as transit typically involves moving between stations, with different fare calculations and rates required depending upon the actual travel distance, direction, patron category, and/or times of use, fares may need to be computed based on station entry and exit location, direction, mode of travel, category of patron, and possibly time of day. This would require that the smart card terminals/readers at each station or route be able to perform these computations based on data stored and retrieved from a user's card, and subsequent card terminals/readers be able to access data written to the card at previous stations. This places a significant processing burden on the terminals and/or fare processing systems and increases the cost of implementing the infrastructure for such systems. As fare rates and other relevant information generally change over time, this also increases the demands placed upon such systems.
A related issue is the need to protect confidential data on the payment cards. It is known to provide data for multiple accounts on a single card, thereby enabling users to carry a single payment card that permits payment through multiple accounts. In this way, part of the combination card can be utilized for a user's banking payment card, and another part of the card can be utilized for a particular vendor account or for an alternative service provider, such as a transit agency or for venue access. The combination card might include confidential data for authentication and other forms of identification data that are required for payment in a conventional point of sale transaction for the banking payment. Because of security concerns at the alternative agency or venue, it may be undesirable to permit the alternative payment process to have access to the banking data. This can create a problem if a user wishes to link their alternative transaction activities to their standard banking payment account so that the alternative transaction payments can be completed, or if the user desires to use the banking payment account to “load” the balance for the alternative transaction account.
More specifically, transit fare collection, venue entrance fee payment, and the like must be conducted offline because of transaction speed requirements, such as at a transit fare device of a subway turnstile or bus farebox. In such circumstances, there is effectively insufficient time to go on-line to the issuer for transaction approval, and still have time to process a flow of thirty to forty-five passengers per minute, as required in the typical transit environment. Some form of off-line card authentication is required to stem potential counterfeit card attacks and potential for organized fraud. These and other issues that need to be resolved include:                Card authentication must be achieved (off line at the transit fare device) to halt use of counterfeit cards and potential for unbounded fraud. However there are no provisions for card authentication utilizing the existing MSD application.        Key management is problematic in many-to-many relationships (agency's and issuers). Fore instance, how do symmetric keys get exchanged ahead of time prior to creation of issuer/agency relationships?        Creation of appropriate file space and management of card memory is difficult to coordinate, especially in cases where the participants (issuers and agencies) do not have relationships in advance of card issuance.        Transit negative list management is an issue, because of the potential for negative lists to grow out of bounds as contactless issuance expands and/or when counterfeit card attacks occur.        
One technique for a solution to the above problems requires that transit patrons pre-register their cards prior to first use to collect fares, at which time the keys and files may be added to the card. However, transit agencies have indicated they generally do not want everyone to have to register their cards prior to first use.
Another technique for a solution requires that transit agencies and issuers have an advanced agreement and relationship prior to the card being used in transit. Under this circumstance, it is possible that the issuer place the agency keys and files on the card prior to issuance. However, transit agencies have indicated they generally do not want to have to maintain relationships with each issuer. Transit agencies would like any transit-capable card to work in their systems without pre-notification or agreement.
There is a need for payment transaction processing in the use of payment systems that is capable of minimal transaction time processing and that ensures effective fraud prevention. The present invention satisfies this need.